Nokia Management Shakeup To Herald OS Switch

Nokia is said to be planning a major shake up in its executive team, that some believe will herald a possible move to another mobile operating system.

That comes courtesy of The Wall Street Journal, as the rumour mill buzzes over whether the Finnish company will adopt Windows Phone 7 as an operating system for its phones.

According to the Journal’s 7 February report, “several senior Nokia managers are expected to leave the company” in the near term. Nokia CEO Stephen Elop, formerly president of Microsoft’s Business Division, has set 11 February as the date to reveal the company’s business strategy.

WP7 Speculation

Nokia “must build, catalyze or join a competitive ecosystem,” Elop said during a 27 January earnings call, kicking off a good deal of speculation. “We [are] very clearly ensuring that it will give us the opportunity to reopen markets such as the US and some others where we have not recently been present.”

At least one analyst has been poking Nokia and Microsoft to form an alliance over Windows Phone 7, which hit the US market in early November.

In a letter addressed rather familiarly to “Stephen (Nokia CEO) and Steve (Microsoft CEO),” Berenberg Bank analyst Adnaan Ahmad suggested Microsoft’s software platform on Nokia phones would provide mutual benefit to both companies: “You get access to their WP7 intellectual property (IPR) scot-free and access to the US market where your share has dived to the low single-digit level, and in doing [so] cut your bloated handset business R&D budget.”

Microsoft and Nokia already have something of a partnership extending back to August 2009, when the two companies announced that mobile versions of Microsoft Office would come preloaded on Nokia smartphones. At that time, Nokia also began work on optimising Microsoft Exchange ActiveSync for its devices, allowing for more streamlined access to email and personal information.

With both companies feeling pressured by the combined weight of Apple’s iPhone and the growing family of Google Android devices, the time could very well come to elevate that relationship to a new level. According to one analyst, such a boosted alliance offers some advantages.

Android Or WP7?

“The hardware competition is fierce, and companies like Samsung and LG [Electronics] have made enormous gains on the device side by being agnostic and opportunistic,” Al Hilwa, an analyst with IDC, wrote in a 20 December email to eWEEK. Nokia’s quest to “leverage smartphone device economics,” he added, will eventually mean “coming to terms with Android and Windows Phone 7.”

Other analysts feel that Nokia’s path to salvation lies with Android.

Creating an Android-based smartphone, analyst Jack Gold recently suggested, would allow Nokia “to get to market very quickly with a line of compelling smartphone devices that are competitive while giving current Nokia users a migration path with a familiar UI paradigm.”

But Nokia may not have much time. The company’s most recent earnings report placed its quarterly profits at $1.02 billion (£633 million), a year-over-year decline of 21 percent, along with an eroding share of the smartphone market. Nokia is unlikely to disappear anytime soon, but it nonetheless faces competition akin to an existential threat from Apple, Google and the latter’s manufacturing partners.